| Today, the rupee today witnessed a sharp fall against the dollar and closed at its three-year low level of 46.76, losing close to 1 per cent in a day. The RBI was not seen intervening in the foreign exchange market. It had a token presence thought to iron out intraday volatility in trades. |
| The sentiment in the government securities market too was bearish, apprehending a reverse repo rate hike in the forthcoming July policy review. The yield on the 10-year paper closed at 8.36 per cent. |
| Dealers said the rupee was under pressure as global oil prices have risen to $78 a barrel leading to concerns that the government would be prompted to raise fuel prices, which could incite inflation and trigger a further monetary tightening. |
| The dollar also gained against major currencies like the yen and euro in global markets, on speculation that investors are selling riskier assets and buying dollars at Israel-Palestinian tensions intensify. |
| "There were too many negative actors in the forex market. Apart from the rising oil prices, the market is also witnessing higher dollar demand which is a normal phenomenon as the month draws to a close. The dollar is also gaining strength in the non-deliverable forward market," said a dealer. |
| Heavy demand by oil companies led the spot rupee to close at more than two year low of 46.76 to a dollar after opening weak at 46.47/48. The spot rupee on Friday had closed at 46.36 after reaching an intraday low of 46.50 to a dollar. |
| Dealers cited many factors that led to the sharp fall in rupee today. While turbulence in Middle East helped in strengthening of dollar against major global currencies, crude price above $ 78 per barrel created panic among the oil companies in the domestic market. |
| "It was a cascading fall for the spot rupee that witnessed demand both from oil corporate and banks which hit the market in quick successions. This level was last seen in May 2003," said a foreign exchange dealer. |
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